Lecture 12: The Strike
The strike is labor’s major weapon. The lockout is management’s equivalent to the strike. In particular, a lockout is where the workers are locked out of the plant. An
offensive strike is designed to gain improvements for labor: higher wages, increased
fringe benefits. Conversely, a defensive strike is labor’s protest to wage cuts, loss of job security, job loss, and reduced fringe benefits.
I. The Cost of a Strike
A. Costs On Management
The cost of a strike on management will depend on 5 primary factors. First, the
cost of a strike on management will increase with the extent of the work stoppage. The extent of a strike tends to be greater when the production process is more labor intensive
and when hiring replacement workers is not a feasible response. Further, if the
production can continue using the overtime hours of non-striking workers, then the extent
of the strike will be mitigated. Second, the timing of a work stoppage can affect the cost of a strike on management. For example, if a company has seasonal sales and a strike
occurs during a peak season, then the cost of a strike on management will be greater.
Third, the nature of the product is important. Specifically, if the product can be
inventoried, then management can prepare for a strike and continue selling inventoried
products even if production has halted. Generally, it is more possible to inventory
products made in manufacturing industries than in the service sector. Basically, if a
product is durable, then it can be inventoried; if it is perishable, then it can’t. Fourth, the
cost of a strike on management will increase with the level of competition. When there
is more competition, there is more potential for lost sales (as consumers purchase from
competitors) and lost consumer loyalty. The level of competition is partly determined by
the availability of close substitutes. Finally, the health of the general economy
determines the cost of a strike on management. When the economy is booming, this
means a strike results in relatively more lost sales; when the economy is in a recession,
relatively fewer sales are lost.
B. Costs on Labor
There are three primary ways in which strikes can be costly for labor. First,
workers on strike experience lost wages. Striking workers may also lose fringe benefits
like health care. The potential for lost wages can be alleviated by strike benefits from
union war chests, income from alternative employment, and public assistance. The
potential for lost wages has recently been reduced with the increased incidence of dual-
earner families and liquid financial positions. A second cost of a strike to labor is union
divisiveness. Unless there is strong support for the strike by the workers, strikes may
increase union divisiveness. Finally, strikes hurt unions by increasing membership loss. Membership is lost in three ways. First, workers could quit the union and return to work.
Second, permanent replacements could be hired, and these replacement workers are
generally less likely to join the union. Additionally, striking workers may find alternative
employment and never return to their old job, even when the strike is over. This may
lead to calls for de-certification.
The incidence of striking activity has gone down over the last couple of decades.
One reason may be that strikes are more costly for labor and management than they used
to be. There are various reasons why strikes may be more expensive. First, competition
has increased from globalization (free trade) and deregulation. Second, unemployment
was low during the mid and late 1980s and 1990s. Thus, the 1980s and 1990s were a
period of economic expansion, which increased the cost of strikes. Thirdly, the threat of
membership loss has increased recently. This has occurred because the Supreme Court
has ruled that striking workers can quit the union and return to work during the strike
(without fines by the union). Additionally, permanent strike replacements can be hired,
with striking workers losing their jobs and their accumulated seniority. Finally, Reagan’s
firing of the air traffic controllers made firing workers on strike more socially acceptable
behavior for management. To combat these effects, President Clinton issued an
executive order in March of 1995 stating that the federal government would not grant
government contracts to companies that did replace striking workers with permanent
replacements. Companies like Boeing and McDonnell Douglas will be greatly affected
by this policy.
II. Reasons for Striking
The primary reason for striking occurs when labor and management reach an
impasse in the collective bargaining process. The strike is a step in this collective
bargaining process: if management doesn’t agree to union terms, a strike is one of four
possible results. The threat of a strike and the strike itself give the union bargaining
power in collective bargaining negotiations.
Workers may also go on strike to show management that labor has the power to
disrupt production with a work stoppage. Further, a strike can be a therapeutic device for
labor to vent frustration and anger. A strike can also give the workers a needed vacation.
This is especially useful if labor has been overworked. Additionally, a strike may bring
union unity. A dispute with management has the potential to engender unity among the
workers. Lastly, a strike may be used to show management that labor resents having to
grant concessions to management.
There are different kinds of strikes. A wildcat strike is one that is not sanctioned
by the national union, occurring while the collective bargaining agreement is in force. A
strike under these circumstances could result in management suing the local striking
union, seeking a court injunction demanding that labor return to work, or firing the
striking workers. A sympathy strike is a work stoppage in support of strike by another union. It is illegal for a striking union to explicitly solicit the support of another union in
the form of a sympathy strike. A sitdown strike is where labor is at work, but refuses to
work. Labor also refuses to leave the plant to allow other workers to carry on. This type
of strike is illegal. A work assignment strike is a work stoppage protesting work being done by other workers. This type of strike is also unlawful and a court injunction can be
issued to stop it. A recognitional strike is an action by an uncertified union seeking recognition to bargain with the employer. Picketing for such recognition is illegal.
Informational picketing to hold a certification election through the NLRB is legal.
Examples: The three major strikes of 1998:
General Motors vs. United Automobile Workers (UAW). A strike at a metal-
stamping plant in Flint, MI and a strike at a Delphi auto parts plant in the same town in
June of 1998 resulted in 26 of 29 GM assembly plants and over 100 parts plants being
affected by these two local strikes, idling 152,000 workers. These two plants made
fenders, hoods, doors and auto parts such as spark plugs and filters. The strike was over
health and safety issues, production standards and subcontracting. After marathon talks
later in the month, an agreement was reached whereby GM would work to fix all
unprofitable production lines, and GM would bar the transfer of production of oxygen
sensors, fuel systems, air meters and other parts to other plants through the effective date
of the national agreement. GM was also prohibited from selling the parts plant to
another company through January 1, 2000. 3.3 million days of idleness.
US West vs. Communications Workers of America. US West is a communications thcompany that was spun off from AT&T in 1984. On August 16, 34,000 operators,
technicians and customer service representatives went on strike over 1) a performance-
based pay plan, 2) the amount of mandatory overtime, and 3) the employees’ health care thoptions. A federal mediator assisted in the negotiations. On August 30, an agreement
was reached where the union agreed to a version of the company’s pay-for-performance
plan in exchange for reduced mandatory overtime and the retention of the current health
insurance plan (which the union favored over the company’s proposed health care plan).
The pay-for-performance was to be voluntary whereby workers could forgo annual wage
increases in exchange for an annual bonus of up to 20 percent of their base pay that is
tied to productivity. The company had proposed making the program mandatory for new
network technicians. Mandatory overtime was cut to 16 hours per week effective January
1, 1999 and to 8 hours per week effective January 1, 2001. Employees retain their
current health insurance options whereby the company pays for 100 percent of premiums
for selected insurance companies. US West had proposed paying 100 percent of
premiums for only one insurer, and employees would have had to pay the premiums if
they enrolled under other health care plans. 340,000 days of idleness.
Northwest Airlines vs. Airlines Pilot Association. Pilots went on strike over wages thand job security on August 29. The pilots wanted a 15 percent wage increase over a 3 year period and Northwest wanted a 9 percent increase over 4 years. The pilots wanted
the elimination of the two-tiered wage system and they wanted to restrict Northwestern’s ability to outsource. Federal mediators conducted meetings with the parties, making thsuggestions that lead to a resolution on September 10. The resolution allowed an
annual 3 percent wage increase( 12% over 4 years), a lump-sum payment equal to 3.5
percent of an employee’s earnings and the elimination of the two-tiered wage scale over a 3 year period. The agreement also contain job protection provisions preventing some
job loss from outsourcing. 215,000 days of idleness.
III. Strike Activities
First, union leaders garner the support of the rank-and-file members with intra-organizational bargaining and with affirmative strike votes. Then, strike headquarters are
needed: often the local union hall. Next, striking workers will picket to try to shut down
the plant completely by making it more difficult for replacement workers to get to the
plant. Picketing is unlawful under the Taft-Hartley Act, but striking workers do it
anyway until the authorities intervene. Fourth, the workers seek to gain the public’s
support with a publicity campaign, often portraying labor as the victim or underdog in the
dispute and management as the exploiter. Finally, the union must provide strike benefits
and compensation, which is usually available from the national union that is sanctioning
IV. Strikes over Unfair Labor Practices
Strikes over unfair labor practices (ULP) are different. After an ULP, workers must be immediately reinstated at the conclusion of an unfair labor practice strike. That
is, permanent replacement workers cannot be hired.
V. The Lockout
Essentially, the lockout is a work stoppage by management. These are more rare
because they can be costly to management. They can result in increased union solidarity.
If management closes down the plant, then it still has to pay fixed costs of production like
plant rent or overhead. Further, in some states, workers can draw unemployment
compensation, giving them the ability to survive a long lockout.
Problem Set 12: The Strike
The Amalgamated Transit Union (ATU) represents over 9,000 drivers, office
workers and mechanics at Greyhound Lines, Inc. On March 2, 1990, Greyhound workers
went on strike after failed negotiations. During the strike, there were a number of violent
events (37 reported shootings of buses and three reported shootings directed at terminals).
At one point, Greyhound cancelled all negotiations until 7 days without a violent incident
a) What is it called when labor and management continue operating under the terms
of the expired contract?
b) What options are available to labor and management when they reach an impasse
in their contract negotiations?
Once the strike started, Greyhound hired permanent replacement workers and
continued to operate although at a reduced service level. On May 22, 1990, the ATU
made an unconditional offer to return to work. However, Greyhound declared that with
the permanent replacements in place, it would be unable to accommodate very many of
the returning strikers. Instead, Greyhound offered to place the returning strikers on a
recall list. The ATU then filed an unfair labor practice (ULP) charge with the NLRB
claiming that Greyhound had not bargained in good faith and therefore had to rehire
striking drivers and discharge the replacements.
c) From the viewpoint of workers on strike, what is the major difference between an
unfair labor practice (ULP) strike and an economic strike?
d) Because management seems so willing to hire permanent replacement workers,
labor is turning to tactics other than strikes. One such tactic is where workers
remain on their job but the workers are relatively unproductive. In a dispute with
McDonnell Douglas, the United Auto Workers refused to install parts without
blueprints. In general, these workers worked to the minimum of their job
requirements to force management to union terms. What is this type of activity
The United Mine Workers represent 2,000 Pittston Coal Company miners in
Kentucky, Virginia and West Virginia. On April 5, 1989, 1400 Pittston miners went on
strike, protesting Pittston’s refusal to contribute to a multi-employer trust fund that paid
the medical benefits of 6,000 Pittston retired miners. The trust fund had been negotiated
by Bituminous Coal Operators Association (BOCA), which negotiated on behalf of 14
major coal companies. Because Pittston withdrew from BOCA in 1988, Pittston also
terminated its contribution to the BOCA trust fund. Instead, Pittston implemented a
benefit plan that called for worker co-payment of medical bills. While Pittston miners
were on strike, news reports indicated that other coal companies were helping Pittston fill
orders during the strike. Due to these reports, wildcat strikes began in northern and
eastern West Virginia idling 40,000 miners.
e) What is a wildcat strike?
A U.S. District Court ordered the striking miners to end the wildcat strikes because they were considered to be sympathy strikes with UMW members. Further, UMW
incurred $63 million in fines levied by the courts.
f) What is a sympathy strike and what circumstances make it illegal?
g) Why might strike fines mandated by law prevent strikes?
h) Do workers have the right to strike? Does your answer hold for all sectors of the
Answer Key 12: The Strike
a) A holdout is used in place of a strike. (Especially in place of a defensive strike when
management wants to gain concessions in collective bargaining.) The union and its
members, trying to hold on to what they have, will continue to bargain while working
under the terms of the old contract. The terms of the old contract are often more
favorable than the ones management wants to impose. Under these conditions,
management will initiate the work stoppage itself (a lockout) to pressure the union to
accept the concessions.
b) Labor and management can 1) continue to try to solve the impasse on their own while
working under the expired contract’s terms or without a contract, or they can 2) resort
to a work stoppage (strike or lockout), or they can 3) call in a mediator or conciliator
to work with them as labor and management continue to fashion compromises and
solutions to the impasse, or finally, the two parties can 4) call in an arbitrator who
will settle the impasse by imposing a solution.
c) The major difference between an unfair labor practice (ULP) and an economic strike
is that workers in a ULP strike cannot be permanently replaced by strike-breakers. At
the end of the ULP strike, the striking workers must be immediately reinstated to the
jobs they held before the work stoppage.
d) A Slowdown, whereby staying on the job, the union and its members can work from
the inside to press for their proposals.
e) A Wildcat Strike is one in which a local union strikes without the sanction of its
national union. Further, it usually occurs during the term of the collective bargaining
agreement, an agreement which normally forbids work stoppages while it is in force.
Wildcat strikes are typically spontaneous actions, such as blow-ups over alleged
unsafe conditions at the company.
f) A Sympathy Strike is a strike by workers in a union that is not having a dispute with
a company, but the strike is carried on in support of a union that is and is on strike
against that company. As a matter of principle, the sympathy strikers are refusing to
cross the picket lines of another union. Such acts of conscience are legal. However,
if the striking union sought concerted action or support from other unions to honor its
picket lines and go on sympathy strike, then this would be illegal. Inducing sympathy
strikes makes them secondary strikes, prohibited by the Taft-Hartley Act. g) Strike fines discourage strikes by increasing the cost to the parties of striking. The
balance of power in strike situations is a function of costs, so increasing the costs
would prevent strikes.
h) Workers in the private sector have the right to strike. Under the NLRA, workers can
strike after 60 days of formal bargaining if they reach an impasse, and if their present
agreement with their employer is expired. Under the RLA, workers cannot strike
until the NMB declares its mediation has failed, and the parties are at an impasse. At
this point, after 30 days, they can strike. In the public sector strikes are illegal in
some instances. Federal government workers cannot go on strike and most states
prohibit state employees from going on strike.